What Is Floor Plan Financing Interest

The money borrowed from the bank collects interest and one has the choice to either make a minimum payment or pay off the balance in full when the bill is due.

What is floor plan financing interest.

Floor plan financing interest expense. But it came at a cost. Floor plan financing interest expense is interest on debt used to finance the acquisition of motor vehicles held for sale or lease where the debt is secured by the acquired inventory. Floor plan financing interest expense remained fully deductible under tax reform.

Floor plan financing interest expense is not subject to the section 163 j limitation. So how does floor plan financing work. Dealerships that take the floor plan financing interest exclusion in computing their limit can t claim 100 bonus depreciation for their fixed asset additions. Simply it is a way for an auto dealer to use a lender s funds to finance the cars and until each of them is sold the lender holds title to the cars.

Floor plan lending is a form of inventory financing for a dealer of consumer or commercial goods in which each loan advance is made against a specific piece of collateral. Specialty lenders traditional banks and finance arms of manufacturers provide the.